BofA, JPMorgan Fail to Make Fannie Mae Grade for Loan Servicing

By John Gittelsohn -
Sep 15, 2011

Bank of America Corp. (BAC), the largest
U.S. mortgage servicer, failed to make a list of companies doing
a satisfactory job of assisting homeowners struggling to pay
their mortgage, according to Fannie Mae.

“Servicers who achieve the highest ratings are leading the
way in providing assistance to homeowners who are having
difficulty making their mortgage payments,” Leslie Peeler, vice
president of servicer portfolio management for Washington-based
Fannie Mae, said in the statement yesterday.

Loan servicers interact with borrowers, collect mortgage
payments and oversee foreclosures. More than 228,000 U.S.
homeowners received foreclosure filings in August, the highest
total since March, RealtyTrac Inc. reported today. Default
notices rose 33 percent from July as lenders began to speed up
processing of paperwork delayed by probes into documentation
practices, the Irvine, California-based data service said.

Loan Modifications

The Obama administration has sought to prevent foreclosures
through its Home Affordable Modification Program, which pays
banks and servicers to modify monthly payments for delinquent
borrowers. About 675,000 homeowners have had permanent loan
modifications under the plan through July, compared with the
initial goal of as many as 4 million by 2012, according to the
Treasury Department. Another 2.42 million homeowners were
offered modification plans through proprietary programs from
servicers.

Under Fannie Mae’s Servicer Total Achievement and Rewards,
or STAR, program, mortgage companies were scored based on the
number of distressed homeowners who receive help and the
customer’s experience, such as the response time for complaints,
in the second quarter. Satisfactory scores range from three
stars for “at least median performance” to five stars for
“superior performance.”

This is Fannie Mae’s first report on the STAR program,
announced in February. Servicers below the median or with
unsatisfactory results don’t receive a rating.

Andrew Wilson, a spokesman for Fannie Mae, said the company
wouldn’t discuss the servicers who failed to make the list of
those on pace for at least three-star ratings. Fannie Mae, which
has been in U.S. conservatorship since 2008, is the country’s
largest mortgage financier.

Working Toward Improvement

Bank of America, which has given modifications to more than
910,000 borrowers since 2009, has “previously acknowledged that
there is room for improvement in key areas, particularly those
affecting the customer experience, and we are continually
improving our processes to assist distressed homeowners,” Rick Simon, a spokesman for the Charlotte, North-Carolina-based
lender, wrote in an e-mail.

“Our team will continue working to prevent foreclosure for
our customers who are experiencing hardships as a result of
unemployment, underemployment and other continued economic
conditions in our country,” said Simon, whose company announced
plans on Sept. 12 to slash 30,000 jobs.

Simon declined to comment specifically on the Fannie Mae
report. Thomas Kelly, a spokesman for JPMorgan in New York, also
declined to comment, as did David Isaacs, a spokesman for
Pasadena, California-based OneWest Bank.

Talks Over Status

PHH declined to comment because it is in talks with Fannie
Mae about its status on the list, Jonathan McGrain, a spokesman
for the Mount Laurel, New Jersey-based company, wrote in an e-
mail.

MetLife is “committed to the highest level of customer
service,” David Hammarstrom, a spokesman for the New York-based
insurer, said in an e-mail. “In the past 12 months the company
has completed over 8,000 workouts, including modifications,
repayment plans and forbearance plans.”

MetLife Home Loans received the second-highest ranking for
customer satisfaction among mortgage originators from J.D. Power
& Associates, a marketing-services company, Hammarstrom said.
Moody’s Investors Service this month downgraded its servicer-
quality rating of MetLife, citing deterioration in call center
customer services, which had “performance levels that are
significantly worse than its peers,” according to a Sept. 9
statement.

Fred Solomon, a spokesman for Pittsburgh-based PNC, didn’t
immediately return an e-mail seeking comment. Mike McCoy, a
spokesman for SunTrust in Atlanta, said the company wasn’t
immediately able to comment.